March 6, 2014

President Releases FY 2015 HUD Budget

by Sharon Wilson Géno and
Mary Grace Folwell

President Obama's fiscal year 2015 budget for the U.S. Department of Housing and Urban Development (HUD), released on March 4, 2014, increases funding for many programs compared to the fiscal year 2014 appropriation. It also includes language that would change some aspects of the public housing program, and provides a preview of HUD legislative proposals.

The budget suggests the following funding for HUD programs:

It calls for $1.925 billion for the public housing capital fund, a slightly higher amount than the $1.875 billion funded in fiscal year 2014.

The Public Housing Operating Fund would be funded at $4.6 billion, a 4.5 percent increase over the fiscal year 2014 funding amount of $4.4 billion.

Renewal funding of $18 billion for housing choice vouchers is intended to support renewal of all vouchers in use in 2014 and is intended to restore reductions that resulted from the 2013 sequestration funding cut.

Administrative fees for the housing choice voucher program would increase 14 percent, from $1.5 billion in fiscal year 2014 to $1.705 billion in fiscal year 2015.

The spending plan includes $75 million in incremental funding for Veterans Affairs vouchers.

The budget would allocate $10 million to the Rental Assistance Demonstration (RAD) program to support conversion of units in high-poverty neighborhoods that could not convert under existing funding levels. The RAD program is currently authorized to convert up to 60,000 units for conversion of public housing and Mod Rehab units. The President's budget would eliminate the cap on the number of units and extend the application deadline to September 30, 2018. Several changes to the RAD program are proposed, including permitting Section 8 Moderate Rehabilitation (Mod Rehab) Single Room Occupancy properties to convert under RAD; extending the sunset date on conversions of Rental Supplement Program, Rental Assistance Program (RAP), and Mod Rehab properties to September 30, 2016; and authorizing the conversion of Rental Supplement Program and RAP properties to Project Based Rental Assistance (PBRA) contracts.

The budget proposes $120 million for the Choice Neighborhoods Program, an increase from $114 million appropriated in fiscal year 2014, which is expected to fund three to four implementation grants and up to 20 planning grants.

The PBRA program would be funded at $9.746 billion, down from the fiscal year 2014 funding of $9.917 billion. The budget would shift funding to a calendar year funding cycle.

The budget includes language that would implement changes to the public housing program, including allowing full flexibility between the public housing operating and capital funds to high-performing housing authorities with HUD approval. The budget also includes language that would limit compensation of housing authority personnel, linking it to the number of units administered by the housing authority.

The budget document states that HUD will release legislation to Congress later this spring, substantially expanding the Moving to Work Program to high-performing agencies; increasing the threshold used to determine deductions for unreimbursed medical expenses from 3 percent to 10 percent of family income; allowing fixed-income families to recertify their incomes every three years; and establishing a utilities conservation pilot to encourage public housing authorities to undertake energy conservation.

The President's budget also states, as it has in past years, that it intends to fund the Housing Trust Fund with $1 billion identified outside of the appropriations process. The President’s budget also includes a proposal for "Project Rebuild," which would be funded with $15 billion, also to be identified outside of the appropriations process. Project Rebuild, similar to the Neighborhood Revitalization Program, would fund abandoned and foreclosed residential properties and increase the eligibility of commercial properties. It would be allocated by formula to states and local governments, and a portion would be competitively allocated to governmental, nonprofit, and for-profit entities.

Ballard Spahr will continue to monitor the appropriations process and track how Congress responds to the President’s proposed funding levels and new programs. For more information, please contact Sharon Wilson Géno at 202.661.2218 or genos@ballardspahr.com, or Mary Grace Folwell at 202.661.7605 or folwellm@ballardspahr.com.

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